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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Friday, 06 March 09
CHURCHILL STARTS REVERSE DRILLING AT INDONESIAN COAL PROJECT
Miningweekly reported that, Aim-listed minerals explorer Churchill Mining on Thursday stated that reverse drilling at its East Kutai coal project (E ...
Thursday, 05 March 09
UAE FUND PLANS INDONESIA COAL RAIL LINK
News.alibaba reported that, A United Arab Emirates' fund signed a memorandum of understanding on Monday (2 March 2009) with an Indonesian prov ...
Thursday, 05 March 09
CHINA COAL-PRICES LITTLE CHANGED DESPITE PLUNGE ABROAD
China's spot coal prices were little changed from a week earlier, despite the sharp fall in the international market, and demand for coal remains s ...
Thursday, 05 March 09
RAK TO BUILD COAL FIRED POWER STATION
The National Ras al Khaimah, which is developing a coal mine in Indonesia, will build a coal-fired power plant in the emirate in the next two years ...
Wednesday, 04 March 09
COAL: GLOBAL DEMAND WEAKENS
The Jakarta Post reported that, While coal prices were stickier on the way down compared to other commodities like oil, the Newcastle price now sugg ...
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Parliament of New Zealand
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Planning Commission, India
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Australian Coal Association
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
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